Apple doubles iPhone, iPod Touch storage to 16GB

But don't expect a 3G iPhone until midyear, says analyst

Apple Inc. added new iPhone and iPod Touch models to its lineup of phones and music players today by doubling the maximum amount of storage space in each to 16GB.

The new top-of-the-line iPhone is priced at $499, Apple said today. This is the first time since September, when Apple dropped the 4GB iPhone from its sales sheet, that the smart phone family has had multiple models. Apple continues to sell the 8GB iPhone for $399.

The iPod Touch -- for all intents and purposes is an iPhone that cannot make or take calls -- now sports a 32GB model, also priced at $499, as a third option. Older models, including the $299 8GB and the $399 16GB configurations, remain available.

"This is just a bigger, faster kind of announcement," said Ezra Gottheil, an analyst at Technology Business Research Inc., speculating that the timing was partly driven by an attempt to pump iPhone sales during a traditionally slow period. "Mobile phone [sales] aren't as seasonal as iPods, but they are seasonal."

Gottheil said he still expects Apple to make major changes to the iPhone in 2008, adding 3G capability and perhaps even true GPS functionality. "I'd put that around the middle of the year," he said today.

The larger capacity iPhone and iPod Touch are available immediately at Apple's own retail stores, at its online outlet and at resellers in the U.S. The upgraded models sell for 499 euros in Europe and £329 in the U.K.

The new iPhone's price tag is the same as the 4GB model's price when the latter debuted in June 2007. Just over two months later, however, Apple CEO Steve Jobs ditched that model and slashed the price of the 8GB smart phone by $200, to $399.

Several users who said that they had recently bought 8GB iPhones asked on Apple's support forum whether they would be allowed to swap their purchase for the larger-size model. Apple's policy is to accept returns within 14 days, although a 10% restocking fee applies if the iPhone box has been opened.

Other recent customers complained of the bump in storage. "I bought my iPhone about a month ago, so I have no way of exchanging my phone," said a user pegged as SimonLee. "But Apple doesn't care about that because it just wants me to go and buy a new one."

That kind of comment got little love on the forum. "Blah blah blah, go cry somewhere else," said Goshia on the same thread.

"Maybe the solution is to never bring out a new product. Oh, but then you'd complain too," said Simon Taylor. "So Apple, please stop developing new products or improving the ones you have. You are upsetting your customers. They would obviously prefer to use the original Apple II."

Copyright © 2008 IDG Communications, Inc.

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